Tuesday, August 17, 2010

R12:Reporting Currency and Secondary Ledger (MAR)


Reporting Currency: If you want to maintain your ledger transactions in multiple currencies, you can use reporting currencies.Reporting currencies are additional currency representations of primary or secondary ledgers. Reporting currencies can be used for supplementary reporting purposes, such as consolidation or management reporting.

Reporting currencies can be maintained at the following currency conversion levels:

Balance Level: The Balance level reporting currency is maintained only for GL account balances by using translation to convert the balances from the ledger currency to the reporting currency. Balance level reporting currencies can be assigned to primary and secondary ledgers using Accounting Setup Manager, or they can be system-generated the first time you run translation using a different currency.
Journal Level: The Journal level reporting currency is maintained for GL journal entries and balances when you post journals in your primary or secondary ledger.
This type of reporting currency is maintained using the General Ledger Posting program.
Each time you post a journal entry in the associated primary or secondary ledger, another journal is created and posted to the Journal level reporting currency within the same journal batch.
Subledger Level: The Subledger level reporting currency is maintained for primary ledgers only. They maintain a currency representation of the primary ledgers' subledger journals, journal entries, and balances. This type of reporting currency is maintained by Oracle Subledger Accounting (SLA) and the GL Posting program.

In 11i:
If it is Balance level then it can be achieved by using Translation process.Generate Trial balance in reporting currency.
If the details level information such as Subledger or Journal then it would be achieved through Multi reporting Currency (MRC).

Reporting Currency Functionality in R12 is combination of both MRC and Reporting currency in 11i.

When to Use Reporting currency: Out of the Ledger 4C's only Currency would be different from Primary Ledger.



Secondary Ledger (MAR)
Multiple Accounting Representation (MAR), as the name suggests meant for Multiple Account representation for  the various Accounting governing bodies requirements. The governing  bodies could be US GAAP,IASB,IFRS and local authorities. Secondary Ledgers can be unlimited as per the requirement.

In 11i:
In AX Countries there is a concept called Dual posting, where we can enter in Global chart of Accounts and post in Local COA.
Eg: If there is a Business Unit in France, and the reporting Organisation is in UK then we would need two COA's. One COA to meet the local Govt rules and the other COA to maintain the uniformity across the Global Business Unit which inturn would be helpful for the Management reporting.
In this case dual posting is used to enter in a COA and post the same in the other COA. But this is only meant for the following Subledgers:
  •  Oracle Inventory
  •  Oracle Receivables
  •  Oracle Payables
For all other modules in 11i we use consolidation process to transfer the date from entered to Reporting COA.
In R12 this can be achieved through seconday Ledger where we can have different COA than the primary Ledger and with help of SLA we achieve all the statutory required to the organisation.Also  in R12 this is available for almost all modules like AP,AR,FA,GL,etc..

Secondary ledgers can be used to represent your primary ledger's accounting data in another accounting representation that differs in one or more of the following from the primary ledger:

• Chart of accounts

• Accounting calendar/period type combination

• Currency

• Subledger accounting method

• Ledger processing options

When to Use  Secondary Ledger :

  • For example, if a legal entity must perform corporate and statutory reporting, you can use the primary ledger to satisfy corporate reporting requirements and then use a secondary ledger to satisfy statutory reporting requirements.
  •  If a legal entity is a subsidiary of a parent company and must produce its financial results according to the parent company's reporting requirements in addition to its own local reporting requirements, then a secondary ledger may be used to satisfy the additional reporting requirement.
Secondary ledgers can be maintained at the following data conversion levels:

Balance: The balance level secondary ledger maintains your primary ledger account balances in another accounting representation. This type of secondary ledger requires you to use Oracle General Ledger Consolidation to transfer your primary ledger balances to this secondary ledger.

Subledger: The Subledger level secondary ledger maintains subledger journals, general ledger journal entries, and balances in the additional accounting representation. This data conversion level uses both Oracle Subledger Accounting and General Ledger Posting to create the necessary journals in both your primary and secondary ledgers simultaneously.
Journal: The journal level secondary ledger maintains your primary ledger journal entries and balances in an additional accounting representation. This type of secondary ledger is maintained using the General Ledger Posting Program. Every time you post a journal in your primary ledger, the same journal can be automatically replicated and maintained in the secondary ledger for those journal sources and categories that are set up for this behavior.

Adjustments Only: The Adjustments Only Secondary Ledger is an incomplete accounting representation that only holds adjustments. The adjustments can be manual adjustments or automated adjustments from Oracle Subledger Accounting.
This type of ledger must share the same chart of accounts, accounting calendar/period type combination, and currency as the associated primary ledger. To obtain a complete secondary accounting representation that includes both the transactional data and the adjustments, you must then combine the adjustments-only secondary ledger with the primary ledger when running reports.

Difference between Reporting Currency and Secondary Ledger (MAR)
  • Reporting currency is used only when the Currency of Primary Ledger need to be changed for reporting purpse.This can be used to capture the information in reporting currency at Balance level,Subledger level and Journal level.
  • Secondary Ledger could be used when you need to change the Chart of Aaccounts and Accounting convention method to meet the stattutory and corporate requirements.This is used primarily where the organisation need to report in diffrent autorities like Local authorites,US GAAP,IFRS,IASB etc.

Summary: If  the business requirement is  to have diffrent Currency  from Primary Ledger  then we can choose Reporting currency where as if we need to have different COA or SLA ,Calendar Method then use Secondary ledger.


 Thanks
Arun kumar Tangudu

Sunday, August 15, 2010

R12 -AP /AR Netting an Advance version of Contra

Hi All,

Introduction :

Organisations always Aim for the follwing objects.
1.Reduce the cost to improve the Margin
2.Quick decesion Making.

Therefore To reduce the Reconciliation process time  so that decesion making would be faster and avoid manual errors Oracle has introduced AP/AR Netting  for the Parties who acts as Supplier and Customer for the Organisation.

What is AP/AR Netting:

In the business if a party is a supplier and also customer then the amount need to pay and elgible to receive from that Party would need to be knocked off and only the left amount received or paid need to  be settled in cash.

Oracle AP/AR Netting is  the process  where in the AP , Party who is a supplier  and also in AR where Party is a customer has some balance in their Account.
To do the settlement both AP and AR Balnce need to be knocked off and rest amount need to be paid.

How to do AP/AR Netting:
  • Define a netting control account
  • Define the exchange rate types if using multi-currency netting.
  • Define Netting bank Account
  • Define payment method
  • Define and assign sequencesBefore multiple customers are netted, you must set up a paying relationship for the customers Enable the Allow Payment of Unrelated Transactions Receivables System Option.
  • Define Netting Agreement
Note: If you need Document for the same please reach me@caoraclefin@gmail.com


When to do AP/AR Netting:
This can be used for all parties who has balance either directly in APand AR or also party relationship company has the balance.

Advantages:

  • Reconciliation becomes easier as the number of transactions would reduce after applying the Netting.
  • No Manual intervention is required.
  • As there is manual intervention is required risk of errors is very less.
  • Unlike Contra Customer needn't be defined in the same name as supplier for netting
Disadvantage:

  •    This is applicable only when the party is available as  a Customer and suplier with in  a single operating Unit.
Backend details:

The following fun tables were involved in the AP/AR netting tables:
  •   fun_net_customers_all
  •   fun_net_suppliers_all
  •  fun_net_batches_all
  •  fun_net_agreements_all
Note:The most important columns for joining the FUN tables are Agreement_id and Batch_id.



                                                Please post your feedbacks.

CA.Ganesh kumar